White House list of 17 warnings by Bush on GSE risks. - Mercedes-Benz Forum

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post #1 of 62 (permalink) Old 09-24-2008, 10:01 PM Thread Starter
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White House list of 17 warnings by Bush on GSE risks.

Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone... Dems Ignored Warnings

For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted.

Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.

The White House released this list of attempts by President Bush to reform Freddie Mae and Freddie Mac since he took office in 2001.
Unfortunately, Congress did not act on the president's warnings:


** 2001

April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."

** 2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

** 2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that "although investors perceive an implicit Federal guarantee of [GSE] obligations," "the government has provided no explicit legal backing for them." As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO," OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

** 2004

February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

** 2005

April: Treasury Secretary John Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)

** 2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, The White House, 12/6/07)

** 2008

January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

"Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)

"[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

"Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President's call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.
In 2005-- Senator John McCain partnered with three other Senate Republicans to reform the government’s involvement in lending.
Democrats blocked this reform, too.

More... Not only did democrats not act on these warnings but Barack Obama put one of the major Sub-Prime Slime players on his campaign as finance chairperson.

UPDATE: The media is not reporting that the failed financial institutions are big Obama donors.

Now it's fairly clear that the Bush administration did its part in trying to get reform of the GSEs. Given the Democrat record on finding culprits, don't you suppose if they could find a Republican responsible for this mess that they'd have him in front of a committee already? The reason is--there aren't any. But they let Frank and Schumer sit in judgment when both should be tried and convicted.

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post #2 of 62 (permalink) Old 09-24-2008, 10:06 PM
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So as the President of the United States, why did he not move on this, the world does consider him the LEADER of the most powerful nation on earth. Why did he not propose and get legislation passed when their was still a Republican majority in the house? He is the President, right?
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post #3 of 62 (permalink) Old 09-24-2008, 10:16 PM Thread Starter
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So as the President of the Unite States, why did he not move on this, the world does consider him the LEADER of the most powerful nation on earth. Why did he not propose and get legislation passed when their was still a Republican majority in the house? He is the President, right?
In July of 2005, McCain and others sponsored such legislation which was blocked by Dems. If you watch US news carefully, you will see a clip of Barney Frank speaking against the bill in the House.

Remember, Congress is not the President's staff; there is a separation of powers. Someone has to sponsor a bill and run it through.

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post #4 of 62 (permalink) Old 09-24-2008, 10:23 PM
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In July of 2005, McCain and others sponsored such legislation which was blocked by Dems. If you watch US news carefully, you will see a clip of Barney Frank speaking against the bill in the House.

Remember, Congress is not the President's staff; there is a separation of powers. Someone has to sponsor a bill and run it through.

So you are saying the POTUS was sitting on his hands from 2001 to 2004 and 11 warnings during this time? Interesting...........
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post #5 of 62 (permalink) Old 09-24-2008, 10:46 PM Thread Starter
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So you are saying the POTUS was sitting on his hands from 2001 to 2004 and 11 warnings during this time? Interesting...........
Only 5 minutes passed between my posting the original item and your reading(?), composing a response and posting it. Accounts for your non-sensical comment above. Go back and comprehend the article and then get back to me.

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post #6 of 62 (permalink) Old 09-24-2008, 10:48 PM
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Only 5 minutes passed between my posting the original item and your reading(?), composing a response and posting it. Accounts for your non-sensical comment above. Go back and comprehend the article and then get back to me.

Just answer instead of questioning my reading abilities..........
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post #7 of 62 (permalink) Old 09-24-2008, 10:53 PM
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I bet the Pres and Dicks portfollios look pretty good still.

Always go with energy stocks! Crisis=cash flow.

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post #8 of 62 (permalink) Old 09-24-2008, 11:02 PM
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First you might want to check out the thread started yesterday by your Southern compatriot.

http://www.benzworld.org/forums/off-...-starting.html

But I will ask the same question to you that he was unable to answer without bobbing and weaving and no real answer.

Quote:
Originally Posted by McBear
With a Republican House of Representatives and a Republican Senate from Jan/2001 to Jan/2007, a hand picked FED chairman and a Treasury Secretary that was willing to do his bidding, we have to ask just why he did nothing but TALK.

He did, on the other hand slow down enforcement of regulations that were on the books which exacerbated the problems we face today. He did, through resolutions of the House and Senate further Deregulate the Financial sector in 2006 which allowed them to grow the amount of high risk debt in their portfolios.

So, we have to ask ourselves, if Bushie was so concerned about Fannie Mae, WHY, with majorities in both houses and majorities on ALL finance committees did he NOT DO JACK SHIT about anything?
Oh, on your other post [#3] , McCain did not sponsor The Federal Housing Enterprise Regulatory Reform Act of 2005. That was Hagel, Sununu and Dole in Jan/2005. McCain did not become "CoSponsor" until May/2006 after the bill was complete.

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post #9 of 62 (permalink) Old 09-24-2008, 11:06 PM
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Only 5 minutes passed between my posting the original item and your reading(?), composing a response and posting it. Accounts for your non-sensical comment above. Go back and comprehend the article and then get back to me.
This was all covered in YESTERDAY's Thread. No need to re-read White House PR for comprehension.

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post #10 of 62 (permalink) Old 09-24-2008, 11:37 PM Thread Starter
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First you might want to check out the thread started yesterday by your Southern compatriot.

http://www.benzworld.org/forums/off-...-starting.html

But I will ask the same question to you that he was unable to answer without bobbing and weaving and no real answer.



Oh, on your other post [#3] , McCain did not sponsor The Federal Housing Enterprise Regulatory Reform Act of 2005. That was Hagel, Sununu and Dole in Jan/2005. McCain did not become "CoSponsor" until May/2006 after the bill was complete.
Your mindless rant, across many threads, that Bush did nothing about Fannie Mae and Freddie Mac, forces me to ask you to define "Jack Shit". List it out for me. You mentioned press conferences. Was there anything else? Would you have wanted him to go up Penn Ave with a chainsaw and start lopping heads off? No president is omnipotent, but you seem to expect that level of function and cry when it doesn't occur.

Every executive has priorities and only so much political capital to spread around to accomplish his objectives. Your hindsight is 20-20 for Bush; can you print up any letters you sent to your Congressperson about the problems with the GSEs?

17 times in one year Bush advances a warning and asks for attention to the matter. If you are sitting on your front porch and I drive by, noticing smoke coming out a window, yell out to you repeatedly, "Your house is on fire" and you don't respond, at some point the shit is all yours to deal with. And that's exactly where Schumer, Frank, Pelosi and Reid find themselves today.

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